"All startups aren't Lenskart" Aavishkaar's Vineet Rai on valuations, new big theme & more

Aavishkaar Capital’s Founder and CEO Vineet Rai believes that the next decade will be ruled by select investable themes such as Artificial Intelligence (AI), climate change, and financial services, with a focus on infrastructure, in an interaction with Business Today. Aavishkaar Group has a portfolio of Rs 11,000 crore, with investments across financial services, retail, consumer tech, and other sectors.

He reiterated the notion that AI will attract the most capital inflow globally and is likely to be the most scalable sector, influencing everyone’s life. He said AI is likely to rule the world in the next few years. However, he pointed out a drawback of AI, noting that future decision-making may be biased due to algorithms and increased dependence on them.

Commenting on climate-related themes, Rai said that decarbonisation, natural resources, and waste management are expected to be the biggest beneficiaries. Carbon trading and payouts will be another major theme for India to look at in the coming years, he said. Clean energy and climate-smart agriculture could be other major fields that may attract significant investor interest.

He believes that financialisation of savings has lowered the cost of capital for lenders. There is massive scope for further financialisation or re-financialisation in the financial services sector. After traditional banks, small finance banks, NBFCs, microfinance institutions, and payment banks, the financial world will move towards newer financial solutions.

Aavishkaar Capital, as part of its core investment thesis, firmly believes in creating social impact for mankind at large, followed by due diligence of financials. Rai, speaking at the second edition of the ‘Sankalp Bharat’ summit, said, “We assess the social impact of the company, followed by its financial strength and vision, before deciding whether to invest.”

Commenting on corporate governance in new-age companies, Rai said businesses should focus on institutionalising operations with a strong emphasis on governance issues. He added that multiple challenges persist in the governance arena even after scalability. Entrepreneurs, he said, should understand the regulatory environment and be realistic about valuations.

He said, “Lenskart has achieved astronomical market valuations as it has been in the market for 15 years, creating a dominant position for itself. Lenskart is a beneficiary of first-mover advantage and therefore commands superior multiples. However, this does not apply to all companies. Businesses need to be more prudent and keep aspirations aside when it comes to valuing themselves.”